Are Vouch Personal Loans Right for You: An Analysis | CreditShout

Are Vouch Personal Loans Right for You: An Analysis

By Kevin / December 2, 2015
Analysis of Vouch Personal Loans

Vouch is a new and unique personal loan provider that allows borrowers to leverage their personal network to borrow more money and get a better interest rate. If you have friends and family members willing to vouch for you to get a loan, Vouch may be a good option for you.

Here's what you need to know to get started with Vouch.

Overview of Vouch Installment Loans

Let's start with the basics of a Vouch installment loan:

  • You can borrow between $500 and $15,000
  • 10.68% to 29.99% APR ( this includes the cost of the origination fee over the term of your loan)
  • Origination fee of 1% to 5%
  • Loan terms are 12, 24, or 36months
  • Credit score of 600 or higher required
  • You will need one or more sponsors to pledge a specific amount if you default. The more sponsors you get, the better your loan terms will be.

Why Vouch May Be Right for You

Vouch is certainly one of the most unique lenders out there. Starting in 2013, Vouch completed an entire year of pilot testing before launching its service nationwide. Rather than focusing solely on credit score, income, and debt-to-income ratios, Vouch considers your network of friends and family members to approve you for a loan. The more people willing to sponsor you for a loan, the better the terms you can get.

For every sponsor you get, Vouch will increase the amount you can borrow or lower your interest rate. For loans under $2,000, Vouch will increase the amount you can borrow by $250 for every sponsor you get. For loans over $2,000, Vouch lowers the interest rate by up to 1%.

Vouch stands out from other lenders in that it focuses on your network rather than traditional credit factors. After signing up for a Vouch account, you can invite people you know to vouch for you to help you get approved and get a better rate. The more people who vouch for you, the better your loan terms.

While not required, people who sponsor you can choose to pledge a specific amount (at least $25) that they will pay if you default on your loan. If someone wants to become a qualified sponsor (which is worth more in terms of lowering your rate), they will need to pledge at least $100 and become qualified. In this case, Vouch will verify that their credit score is at least 580, they are current on all accounts, and they are not in bankruptcy or foreclosure. People who agree to vouch for you will only need to answer a few questions. They will know if you accept the loan, but they will not know any of the loan terms.

One of the most interesting aspects of Vouch is loan rates aren't set in stone. This means that if you get more people to vouch for you, you can end up paying less. Keep in mind that people who sponsor you are basically co-signing on a loan. This is a big commitment. Sponsors who pledge more than $250 will get a hard pull on their credit report but the loan will be reported to their credit as well.​

In our analysis, we think Vouch works best for borrowers who need help from friends and family to establish the credit needed to getter terms for a personal installment loan.

Who Qualifies for Vouch Loans?

While Vouch's underwriting focuses on your network of people willing to sponsor you, you will still need a credit score of at least 600 to qualify. You must also be current on all accounts and not in bankruptcy or foreclosure. You can qualify for better rates if you have a FICO score of 640 or higher and earn at least $48,000.

Along with these basic requirements, you will need to get at least one person to sponsor you, which means pledging an amount of money they will pay if you default.


Personal Loan Resources

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Even Financial Common Loan Application Review​


How Vouch Stacks Up Against the Competition

If you are wondering if Vouch is the right choice for you, then you may want to see how they stack up against some of their competitors.

While Vouch offers decent interest rates for those with great credit, it's mostly designed for people with poor credit who need the help of friends and family members to co-sign a loan.

If you have good credit, you may want to explore some alternatives to Vouch that may be a better option for you.

Vouch Compared to SoFi Personal Loans

SoFi is one of the best personal loan providers if you have excellent credit.

SoFi loans have fixed interest rates as low as 5.50% with loans of up to $100,000. SoFi has more flexible terms than most lenders with no origination fees; Vouch has an origination fee of 1% to 5%.

While SoFi is primarily designed for people who want to fund college or pay off student loans, SoFi loans can be used for any purpose. If you have excellent credit, SoFi will most likely offer you a more affordable loan than Vouch.

Click here to read our complete review of SoFi personal loans.

The Bottom Line

Vouch is designed more for people who don't have the best credit and need help getting approved.

If you have a strong network of people willing to step up and vouch for you to help you get approved, Vouch can be a great option.

Of course, you get the greatest benefit from people who are wiling to sponsor you and pay back a portion of your loan if you default. If you don't have a good network of people willing to accept this responsibility, another lender may be a better option to get a lower interest rate.

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